To Drop the D.R.O.P. Or Not: Police Double Dipping

If pension reform for San Francisco city workers wins acceptance from labor, chances are good that it will be due to a side deal that lets police officers double dip for three more years, claiming their salaries while paying out their pensions at the same time.

The program, Deferred Retirement Option Program, or DROP, was passed with 64% of the vote in February 2008 as a three-year program with an option for the Board of Supervisors to renew it in July 2011 for an additional three years.

This “have your cake and eat it too” policy will be up for renewal at the Board of Supervisors before it expires on July 1. A financial accounting of the cost-benefit of the first three years is due by April 15. This neatly matches the timetable for consideration of a larger pension reform intended for the ballot. Under a provision that applies only to this special police retirement program and authored by the POA, the extension will require approval from six supervisors instead of the super-majority of nine required for all other pension changes.

So far no other unions have suggested a similar program for their members in a Twitter-like rush to require the city to take on all comers for deal sweeteners. Instead other unions are facing take-backs and reduced benefits for their members.

Public Defender Jeff Adachi, who carved out pension reform as a major issue that City Hall was avoiding, calls the DROP program “a sieve for millions of dollars. It has cost $17-$30 million.”

“It has cost the city an arm and two legs,” says Adachi.

Sitting in the middle will be Supervisor Sean Elsbernd, who happens to be the Board’s appointee to the city’s Retirement Board and who also is a participant in Mayor Lee’s talks with labor about pension reform. Elsbernd has been a past advocate for reform and flirted with supporting Public Defender Jeff Adachi’s November ballot measure that rolled back some features in the city’s pension plan.

Supervisor David Campos, who served on the Police Commission before being elected to the Board of Supervisors, tackled the closely related issue, also in 2008, of the Department’s slow implementation of directives to civilianize more police work and free more uniformed officers for active police work.

“It’s not enough to say we are civilianizing – if we have 10 new positions, we need to put that into context of the size of the department. Should we have 100?” said Police Commissioner David Campos, who recently requested a controller’s audit of the process. “To the extent we’re dealing with a staffing crisis, the answer is not just to recruit more police – in the short term we need to maximize the officers we have.”

San Francisco has the lowest utilization of civilians in its police department of any major police departments, according to the Civil Grand Jury report of 2006.

That option has meet with a decided lack of enthusiasm by the POA, including the new plan to place more civilians in police stations to take citizen reports of crime and complaints.

The impact on individual officers is clear: with pensions that amount to 90 percent of their salary plus receiving their full salary, officers in the program are paid hundreds of thousands of dollars each to stay on the job. The impact on the city, which was forecast by the city controller in 2008 to be neutral, is the focus of the report due next week.

POA Crafted DROP

The Deferred Retirement Option Program, called DROP, was the brainchild of the city’s Police Officers Association (POA) who put it on the February 2008 ballot. Bypassing the Board of Supervisors because they wanted to insure that what went on the ballot was word-for-word what the POA wanted, it set out a three year program to allow officers to stay on the job while also drawing their pensions, which were put into a separate tax-free account until the officer retired at the end of three years.

The POA’s case in favor of this program was that the City would be short the officers mandated in the city charter – a mandate also written by the POA some years earlier – and that recruiting new officers to replace retiring officers was more expensive.

It was an argument that had no opponents in the Voter Handbook. It was endorsed by many of the same groups now calling for cuts in the pension benefits provided for lower income workers. Among its proponents were the San Francisco Chamber of Commerce, the San Francisco Republican Assembly, the San Francisco Chronicle, Mayor Gavin Newsom, and most members of the Board of Supervisors.

While there was no argument opposing the ballot measure appeared in the Voter Handbook, SPUR took a position against the measure with its typical detailed analysis of its reasoning.

Then-chief Heather Fong also was briefly on record stating that the proposal “would not necessarily provide a solution to our needs.”

The POA, as expected, is pushing for the program’s renewal even before the financial impact report is completed. For them, it is not about the city budget cost. They argue that the program is needed now – just as they argued before – because of the significant number of police officers near retirement age who otherwise will leave, resulting in further short staffing.

Top Ranks Get Biggest Benefit

The clock for police to participate in the program actually runs years longer than has been suggested. A three year extension would go until 2014, but in 2014, officers could still join the program – which then lasts up to three years for them. The result is that the program impact and funding goes until 2017.

In 2008, the POA sought to influence public opinion by calling attention to the need for more patrol officers working in the community. Little attention was given to the provisions that also made eligible captains, lieutenants and officers above the patrol level.

The city’s Retirement Board provides the Police Chief with a quarterly summary of totals for officers who make appointments to be counseled about the program and that then sign up to participate.

CitiReport obtained the most recent report which totals all quarters through December 31, 2010.

The Retirement Board reports that after 30 months almost half of the participants were police above the level of patrol officer, including four captains, five lieutenants, 18 sergeants and 22 inspectors. A total of 113 police participated in the program during the first 30 months.

As SPUR noted in its 2008 analysis, “The greatest benefit of this proposal goes to the upper end of the police spectrum because it also applies to captains and lieutenants, who are unlikely to be out on the streets where they are most needed. Keeping the high-ranking officers in service longer could actually reduce promotional opportunities for regular officers.”

The POA, as early as October 2010, was preparing its argument for extending the program three more years, promising members that it would actively work to renew the program.

Included in its arsenal is $225,000 for public relations and $150,000 for political contributions this year.

The POA turned to a friendly columnist, Chuck Nevius, to break open its case for extending a program that Public Defender Jeff Adachit characterizes as “legalized double dipping.”

Nevius quotes POA President Gary Delagnes claim that, without the extension, “In two or three years you could lose nearly 500 cops. And that’s in addition to those who just retire without going into DROP.” The POA reprinted Nevius’ column in their newsletter.

The controller’s office is not ready to guesstimate the results of its cost-benefit analysis, which is done in conjunction with the Retirement Board’s analyst, but concurs that there are a number of open-ended issues that may not be answered.

The city’s budget is not expected to have funds for a new police academy class this year or next, according to Department officials. A police class costs an estimated $5 million, including $4 million in pay and benefits for the 50-member class. Whether that cost could be met by eliminating the cost for upper level police officers is not yet known.

Adachi: Legalized Double Dipping

Jeff Adachi, who has pushed the envelope on pension reform, is waiting for the Controller’s study before taking a position on extending the DROP program.

He told CitiReport that he calculates that the 100 police officers with top pay, including overtime and other add-ons, make an average of $257,000 a year. At that rate, just 20 top-paid police departing would offset a full 50-member academy class.

Adachi also suggests that the incentive of double dipping may not be necessary, a point also raised in 2008 by SPUR.

“Most earn pretty healthy. It would seem to be enough” to stay on the job, Adachi said.

“It’s a gift for an officer to be able to collect legalized double dipping. The idea behind it was that it was going to save the city money, but it was never meant to be a replacement for recruiting new officers,” said Adachi. “You are retaining the most expensive police officers, taking money from the General Fund and instead putting it toward salary and pensions.”

“I think it is highly questionable,” continued Adachi. “It’s a very, very expensive way to retain an employee. I think they should examine the outcome, but the preliminary is that it has cost the city an arm and two legs. The whole idea of allowing an employee to receive both a salary and a pension at the same time is not a good idea.”

Adachi points out that reforms often are less than what they seem.

“There is no reform that goes unexploited,” says Adachi. “We saw it with Prop B in 2008 (the DROP program) and the most recent deal with SEIU. We continually make the same mistake of pledging reform and then doing the opposite.

Adachi also is alert to the potential of a side deal that links City Hall approval for extending the DROP program to labor support for rolling back pensions for everyone else.

“We are in the trouble we’re in because of the side deals with city officials and labor unions,” says Adachi.

Political Influence in Side Deals Inflate City Costs

The impetus for such side deals, or pseudo-reforms, is rooted in power politics at City Hall, appeasing those unions with the clout to affect elections.

The Police Officers Association won a charter mandate requiring a high level of police staffing. This was accomplished by first winning support at the Board to place the measure on the ballot, and then rounding up a political all-star team of ballot endorsers, from Dianne Feinstein and Nancy Pelosi to the Chamber of Commerce and the Republican Party. Despite cries of the high cost of city government, none of the backers of high police staffing has suggested revisiting the number, which is used by the POA to then justify such programs as DROP.

In 2004 a measure won that called for hiring more civilians to do the desk work being performed by uniformed officers, thereby putting more officers back into the community. While it won handily, implementation has been lethargic, as then-police commissioner David Campos noted two years later in 2008.

Police and fire are assured parity in San Francisco’s charter, but the firefighters have their own version of mandated staffing levels. In 2005, they won voter approval for a minimum number of “neighborhood fire stations,” which again was backed by the all-star politicos just as police staffing had been. San Francisco is the only jurisdiction with required minimum staffing levels.

Supervisor John Avalos, then chair of the Board of Supervisors Budget Committee, took on the related issue of the firefighter workweek, which is a lighter workweek than any of the other major fire departments in cities like Los Angeles, San Jose, Oakland, Boston and New York. In a 2007 survey, city officials estimated the cost savings of moving to workweeks similar to other departments would save between $7 million and $13 million annually.

The combination of police minimum staffing levels, the slow implementation of civilianizing police department work, the fire department firehouse requirements and firefighter mandated staffing has a cost to San Francisco in excess of $100 million annually.

However, as the city looks to reduce costs for its workforce, those issues remain off the table. Instead the priority is tilted toward pensions for clerks, janitors, gardeners and other bread-and-butter jobs.